Let’s talk about planning fallacies for bootstrapped founders. As a founder, especially if you’re starting a business alone, planning is important. But you have to get it right. There are a few common mistakes to avoid when developing your strategy for a bootstrapped business.
The M in MVP stands for Minimum
One mistake is spending too much time building an MVP — the Minimum Viable Product. This one is likely the most common one. It’s easy to lose track of when to stop adding features and start getting honest feedback from real users. Too often, first-time founders build MVPs with more features than version 4.0 of their competitors’ long-running products. An MVP is supposed to be lean and incomplete. It’s the bare-bones version of the thing you want to end up building, not the entire thing.
Yet, we forget this when we’re in the trenches of building the thing. This is especially true for those with a software development background. We’re trained to polish features before they’re released. Deploying a “mostly done” version of a product feels wrong to someone who has worked in this field for any length of time.
But that’s exactly what we need to do.
As a bootstrapped founder, it’s crucial not to over-scope your MVP and leave room for customer feedback.
Experience this article as a podcast, a YouTube show, or as a newsletter:
When in doubt, remember that your MVP needs the following capabilities and not much more:
- Users need to be able to log in
- They need to be able to solve their most pressing problem
- They need to be able to pay for the service
- They need to be able to reach you for feedback and questions
That’s it. Anything beyond that isn’t an MVP anymore. When you’re planning what to build, drop anything that doesn’t fit into this list. Defer it to a stage when you have established communication paths with your prospective customers. You will need their feedback to build these more advanced features. For the MVP, stay lean.
Another fallacy that new founders often fall into is thinking they don’t need to generate revenue immediately. They read entrepreneurial books about dominating the market and feel that if they can just get enough users, money will come in eventually.
For bootstrappers, the top priority should be generating income that sustains the business. As soon as possible.
I often see people express “revenue purism” here. They believe that their business should make its money in one particular way, and no other. And I get it: it’s great to have recurring customers, but reaching profitability may require selling lifetime access deals or using other non-traditional methods. Don’t get caught up in the idea that your business must only generate monthly recurring revenue. Just because your software founder heroes all have MRR doesn’t mean it’s the only way for you. We’re currently experiencing a world riddled with subscription fatigue. Maybe a one-time sale is a welcome alternative that will get more customers into your business than chasing MRR.
Also, be open to various funding options. Customer-funded businesses are ideal —because they don’t cause alignment issues between where the money comes from and where it goes— but accelerators and venture funds focused on bootstrappers can provide valuable resources (beyond money). Don’t limit yourself by refusing to consider alternative funding avenues. The mentor networks and cash injections these organizations offer can give you a significant advantage without diluting your vision and agency.
Purism is always problematic in entrepreneurship. When planning your journey, build flexibility into your approach.
Build It, and They Will Come?
Here’s another trap: “If you build a good product, people will buy it.” That’s not how it works. This “build it and they will come” mindset is why many businesses fail from the start. In bootstrapped entrepreneurship, success comes from validation, keeping an open mind while trying to find it, and avoiding perfectionism when you’ve found a demand signal.
Building a business based on an unvalidated assumption is risky. Most business ideas are just that: assumptions that someone out there probably needs this product you envision. But that’s just wishful thinking.
Instead, focus on understanding who you want to sell to and their needs. That’s where embedded entrepreneurship comes in. This will help you create a product that has been validated at every step along the way: You know that there are people out there who have real problems, are looking for solutions, and have a budget to pay for them. If your planning doesn’t involve checking for these signals, you skip too many steps.
Find locations where you can observe your target customers and learn how to make their lives easier. By knowing where they are, what they talk about, and their problems, you can identify a good problem to solve. This leads to a helpful solution you can create for them — and with them. Being part of your customers’ “watercooler communities” should be a high-priority item for you.
It’s Not a Solo-Player Game
Finally, a personal note: Consider involving your life partner, family, or friends in your business planning. Bootstrapping a business is hard work and takes a lot of time and effort. You’ll feel that, and the people around you will feel it, too. If you have a day job, you’ll often think about your project during work hours or, even more distracting, during your dinner with the family. It’s essential to have support from those around you to maintain mental health —yours and theirs—and keep your relationships strong and healthy.
If you don’t involve the important people in your life, you, they, and the business will suffer. This ultimately leads to failure way beyond the scope of a software business. To avoid this, include those you value in your entrepreneurial journey.
One last thought, as you’re probably feeling a little overwhelmed here: having it all figured out before starting to “execute” is impossible. Planning everything is just an infinite push towards tomorrow. It never gets you anywhere. You need to be adaptive and fluid in your strategy, and for that, you need tangible things to experiment with and prospective customers to get feedback from. So find your people, hang out where they are, and start building small things they can use. From there, you’ll see your path.